a. To fence a single property with an area of one square mile, with sides that are each one mile long, the total fencing cost would be $14,000.
b. If we have four properties, each with an area of one square mile, the total area would be four square miles. To fence these four properties, the total cost would be $14,000 multiplied by four, which equals $56,000.
c. If we have a single square property that is two miles long on each side, the total area would still be four square miles. However, since it is a single large square, the perimeter would be shorter compared to four separate properties. The cost to fence in this four-square-mile property would still be $14,000.
d. Fencing in the four, one-square-mile properties would cost a total of $56,000. Fencing in the single four-square-mile property would also cost $56,000. Therefore, both options would have the same cost.
In this scenario, there is no cost advantage or disadvantage in terms of total fencing cost between having four separate one-square-mile properties or a single four-square-mile property.
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SBW Goalposts Ltd leases a truck from the NZRU Bank so that it can deliver goalposts to its customers on 1 July 2015. Lease payments of $23,000 are required annually in advance for 5 years (payable 30 June), and a residual payment of $6,592 is required. The implicit interest rate in the lease is 10% p.a. The truck has a useful life of 10 years with a salvage value of $10,000. Required Record the necessary journal entries for SBW Goalposts on the following dates 1. 1 July 2015 2.30 June 2016 3. 30 June 2020 Edit View Insert Format Tools Table
July 1, 2015: Lease Receivable $103,455, Truck $103,455. To record the acquisition of the truck through a finance lease.
On July 1, 2015, SBW Goalposts Ltd acquired the truck through a finance lease from NZRU Bank. The journal entry records the initial recognition of the leased asset (Truck) and the corresponding liability (Lease Receivable) for the present value of lease payments ($23,000 x 4.1695) calculated using the implicit interest rate of 10%.
2. June 30, 2016:
Lease Receivable $23,000
Income Income $10,346
Truck $33,346
To record the annual lease payment and interest income.
On June 30, 2016, SBW Goalposts Ltd made the first annual lease payment of $23,000. The journal entry reduces the Lease Receivable by the payment amount and recognizes Interest Income based on the implicit interest rate applied to the Lease Receivable balance. The remaining balance is added to the Truck's carrying amount.
3. June 30, 2020:
Lease Receivable $23,000
Interest Income $5,819
Truck $28,819
To record the annual lease payment and interest income.
On June 30, 2020, SBW Goalposts Ltd made another annual lease payment of $23,000. The journal entry reduces the Lease Receivable by the payment amount and recognizes Interest Income based on the implicit interest rate applied to the Lease Receivable balance. The remaining balance is added to the Truck's carrying amount.
Note: The journal entries for subsequent years would follow a similar pattern of recording the lease payment, recognizing interest income, and adjusting the carrying amount of the Truck until the end of the lease term or when the residual payment is made.
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A single tenant property measures 100,000 SF. It has a tenant paying an in-place rent of $82/SF/Yr and operating expenses of $40/SF/Yr. The lease is month-to-month. Based on market levels, the rent should be $78/SF/Yr. The property is up for sale and the prevailing cap rate for this type of property is 4.0%. By how much would a buyer over pay if they purchased the property based on the in-place rent?
The property measures 100,000 square feet and has a tenant who is renting it at 82 per square foot annually. There are also operating expenses that need to be paid at 40 per square foot annually. The lease agreement is month-to-month. The rental amount should be 78 per square foot annually, based on market conditions. The property is for sale, and the cap rate for this type of property is 4%. So, let's look at how to solve this:
Annual Rent = 82 * 100,000 = 8,200,000 Annual Operating Expenses = 40 * 100,000 = 4,000,000 Net Operating Income (NOI) = 8,200,000 - 4,000,000 = 4,200,000 Market Value = 4,200,000 / 0.04 = 105,000,000 Purchase Price = 82 * 100,000 / 0.04 = 205,000,000So, the property's current rental income produces a market value of 105 million.
However, the seller is offering the property for 205 million, which is 100 million more than its market value. So, if the buyer purchases the property based on the in-place rent, they will overpay by 100 million.
Hence, the buyer will overpay by 100 million if they purchase the property based on the in-place rent.
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16 A company makes and sells a product that normally sells for $38. Because of a defective machine, 1,000 units were not made correctly and remain in inventory. Each of the defective units has the following costs assigned to it: S 10.00 per unit Direct material Direct labor $ 9.00 per unit S 8.00 per unit Variable manufacturing OH Fixed manufacturing OH $ 1.00 per unit The defective units can either: (i) be sold for $18 per unit, or (ii) repaired for $25 per unit and sold at the regular price of $38 per unit. Which alternative is preferred and by how much? A. Selling the units at the reduced price is preferred by $5,000. B. Selling the units at the reduced price is preferred by $7,000. C. Repairing the units and selling them at the regular price is preferred by $13,000. D. Repairing the units and selling them at the regular price is preferred by $14,000. E. None of the above.
option A is the correct $5,000 , In this question, we are given the following information: A company makes and sells a product that normally sells for $38. Because of a defective machine, 1,000 units were not made correctly and remain in inventory. Each of the defective units has the following costs assigned to it: S 10.00 per unit Direct material Direct labor $ 9.00 per unit S 8.00 per unit Variable manufacturing OH Fixed manufacturing OH $ 1.00 per unit The defective units can either: (i) be sold for $18 per unit, or (ii) repaired for $25 per unit and sold at the regular price of $38 per unit.
To find out which alternative is preferred and by how much, we need to calculate the cost and revenue for each option. Option (i) is to sell the defective units for $18 per unit. The cost of each defective unit is $28, which is calculated as:Direct material + Direct labor + Variable manufacturing OH + Fixed manufacturing OH = $10 + $9 + $8 + $1 = $28Therefore, the loss per unit for option (i) is $10. The total loss for 1,000 units would be:1,000 units × $10 per unit = $10,000Option (ii) is to repair the defective units at a cost of $25 per unit and then sell them for the regular price of $38 per unit.
The cost of each unit after repair would be:Direct material + Direct labor + Variable manufacturing OH + Fixed manufacturing OH + repair cost = $10 + $9 + $8 + $1 + $25 = $53The profit per unit would be:Revenue - cost = $38 - $53 = -$15The loss per unit would be $15. The total loss for 1,000 units would be:1,000 units × $15 per unit = $15,000Therefore, option (i) is preferred over option (ii). The difference between the two options is:$15,000 - $10,000 = $5,000Option A: Selling the units at the reduced price is preferred by $5,000.
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Explain different types of crowd stated by a risk manager named Elias Canetti?
Elias Canetti was a philosopher, anthropologist, and writer who wrote "Crowds and Power," a book that explores the nature of crowds and their impact on human behavior.
In this book, Canetti describes several different types of crowds based on their composition and behavior. These include:
Open Crowd: An open crowd is one that welcomes newcomers and has no fixed or predetermined structure. Examples of open crowds include markets, festivals, and other public gatherings where people come and go freely.
Closed Crowd: A closed crowd is one that is exclusive and has rigid boundaries. Members of a closed crowd share a common identity or purpose, and outsiders are usually not welcome. Examples of closed crowds include secret societies, political parties, and military organizations.
Pack Crowd: A pack crowd is a group of people who behave like animals in a pack, without any sense of individuality or self-awareness. Members of a pack crowd follow a leader or alpha figure, and they may engage in violent or destructive behavior. Examples of pack crowds include riots, mobs, and street gangs.
Mass Crowd: A mass crowd is a large, anonymous group of people who lack a shared identity or purpose. Members of a mass crowd may act impulsively or irrationally, and they are often susceptible to manipulation by leaders or demagogues. Examples of mass crowds include political rallies, sporting events, and concerts.
Swarm Crowd: A swarm crowd is a group of people who move together in a coordinated manner, like insects in a swarm. Members of a swarm crowd may not have a clear leader, but they are highly attuned to each other's movements and respond quickly to changes in their environment. Examples of swarm crowds include pedestrians on a busy street, fans at a crowded stadium, or shoppers during a Black Friday sale.
Overall, Canetti's typology of crowds emphasizes the diversity of human behavior in social settings and highlights the importance of understanding the different dynamics that can emerge in group contexts.
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In each case below, determine the effect on the sellers' total revenue and identify whether the demand curve in this particular market. is elastic, inelastic, or unit-elastic in the relevant price range, a. When the price per package of a brand of chocolate chip cookies increases from $5 to $9, monthly quantity demanded decreases from 20,000 to 10,000 packages. Initial total revenue is $ and final total revenue is $ Demand is (Click to select) - b. A fall in the price of sugar from $5 to $3 per carton raises weekly quantity demanded from 15,000 to 20,000 cartons. Initial total revenue is $ and final total revenue is $ Demand is [Click to select) c. A rise in the quantity demanded of a monthly fashion magazine from 20,000 to 30,000 copies occurs when its newsstand price is reduced from $10 to $7. Initial total revenue is $ and final total revenue is $ Demand is (Click to select) d. Daily quantity demanded of a particular model of earphones rises from 3,800 to 4,000 earphones if the price drops from $200 to $190, Demand is (Click to select) Initial total revenue is $ and final total revenue is $
a)When the price per package of a brand of chocolate chip cookies increases from $5 to $9, monthly quantity demanded decreases from 20,000 to 10,000 packages. Initial total revenue is $100,000 and final total revenue is $90,000. Demand is elastic.
b) A fall in the price of sugar from $5 to $3 per carton raises weekly quantity demanded from 15,000 to 20,000 cartons. Initial total revenue is $75,000 and final total revenue is $60,000. Demand is elastic.c) A rise in the quantity demanded of a monthly fashion magazine from 20,000 to 30,000 copies occurs when its newsstand price is reduced from $10 to $7. Initial total revenue is $200,000 and final total revenue is $210,000. Demand is elastic.d) Daily quantity demanded of a particular model of earphones rises from 3,800 to 4,000 earphones if the price drops from $200 to $190. Demand is inelastic. Initial total revenue is $760,000 and final total revenue is $760,000.
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11. Diversity is the overall consequence of the individual differences present in the workforce. True or false?
12. Showing sensitivity means-
a) being aware of your own assumptions and prejudices and challenging them
(b) ignoring cultural norms and practices when you work with others
13. Communication includes speaking, listening, use of body language and written communication. True or false?
14. Cultural differences can include –
(a) different ideas about movies
(b) reading body language differently
11. The given statement, "Diversity is the overall consequence of the individual differences present in the workforce" is True.
12. The term Diversity means differences in age, sex, race, religion, ethnicity, sexual orientation, and able-bodiedness, whereas individual differences are unique characteristics possessed by every employee. Thus, diversity is the overall consequence of the individual differences present in the workforce.
13. Showing sensitivity means being aware of your assumptions and prejudices and challenging them. The given option a is the correct answer. Sensitivity means being aware of the assumptions, beliefs, and prejudices that affect how people perceive and treat others. It involves being thoughtful and respectful of others, especially those whose backgrounds differ from one's own.
14. The statement, "Communication includes speaking, listening, use of body language and written communication" is True. Cultural differences can include reading body language differently. The given option b is the correct answer.
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the statement of changes in stockholders' equity: multiple choice is reported by very few companies. describes changes in paid-in capital and retained earnings subcategories. does not include changes in treasury stock. is part of the statement of retained earnings. shows only the ending balances in stockholders' equity.
The correct option is: describes changes in paid-in capital and retained earnings subcategories.
The statement of changes in stockholders' equity: multiple choice is reported by very few companies. The statement of changes in stockholders' equity describes changes in paid-in capital and retained earnings subcategories, in other words, it highlights the difference in stockholders' equity accounts and reflects the impact of all activities that affect equity in a business.
Basically, the statement of changes in stockholders' equity helps us track how the equity part of the balance sheet has changed during a period.
It shows the amount of money that shareholders have invested in the business as well as the amount of money the business has earned or lost over a period of time.
Therefore, the correct option is describes changes in paid-in capital and retained earnings subcategories.
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Suppose w=5, r=20, and the production function is Q=54L0.8K0.2. For this production function MPL=43.2(K/L) 0.2 and MPK-10.8(L/K)0.8 A. Write the formula for this firm's marginal rate of technical substitution. When this firm uses the same amount of labour as capital, MRTS = B. Suppose the firm wants to produce Qo-999. Write the two conditions which the firm's least-cost choice of labour and capital must satisfy. The least-cost way for this firm to produce output level Qo is to choose L= and K= . In this case the firm's total cost will be $ C. Give the equation for this firm's total cost. With the conventional axes, accurately draw the isocost line in this case. The slope of this isocost line is and the vertical intercept is Now sketch a representative isoquant for Qo passing through the firm's choice of labour and capital. D. Suppose the union doubles wages. With its current use of inputs, the firm's total cost is now $ Draw the new isocost line. It has slope and vertical intercept E. On the same graph, sketch an approximation of the hypothetical isocost line showing how the firm will substitute capital for employment as a result of the union's wage raise. Then sketch a hypothetical new isoquant showing how the firm will adjust its scale in response to higher union wages if labour is a normal input.
A. The formula for this firm's marginal rate of technical substitution is
MRTS= MPL/MPK= (43.2(K/L)0.2)/(-10.8(L/K)0.8)=-4(K/L)0.2(L/K)-0.8.
B. When this firm uses the same amount of labor as capital, the MRTS is equal to the slope of the isoquant;
hence, MRTS = -4(K/L)0.2(L/K)-0.8 = -4.
The two conditions which the firm's least-cost choice of labor and capital must satisfy are as follows:MPK/ w = MPL / r, and MPL/w < MPK/r. The least-cost way for this firm to produce output level Qo is to choose L=11.03 and K=16.92. In this case, the firm's total cost will be $ 189.02.
The equation for this firm's total cost is TC = wL + rK, which is $ 945.10. The isocost line's slope is -w / r = -1/4, and the vertical intercept is w / r = 1/4. When the hypothetical isocost line showing how the firm will substitute capital for employment as a result of the union's wage raise is drawn, it is shown that the slope is -w / r.
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Describe the accounting treatment for asset impairment under ASPE and IFRS.
Under ASPE, the accounting treatment for asset impairment is as follows:Impairment: The impairment of a long-lived asset (including goodwill) occurs when its carrying amount surpasses the aggregate undiscounted cash flows expected to be derived from its use and eventual disposition.
That is, when the asset's fair value is less than its carrying value.Impairment losses are measured as the excess of the carrying amount over the fair value of the asset, with the carrying amount being written down to fair value. When an asset's carrying amount has been decreased due to an impairment loss, depreciation is recalculated on the lower carrying amount, taking into account any remaining service life.
IFRS requires the accounting treatment for asset impairment as follows: Impairment is defined as a loss in the carrying amount of an asset that is recognized in the statement of profit or loss and other comprehensive income. When the asset's carrying amount surpasses its recoverable amount, impairment losses occur. Impairment losses are calculated as the difference between the asset's carrying amount and its recoverable amount. The recoverable amount is the asset's fair value less costs to sell, which is the amount that can be obtained from the sale of the asset in an active market, less any selling costs.
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The High Speed Rail (HSR) project requires construction of several bridges in the county. There are two parties involved in the decision process: the local government (city) and the railroad company. The local government (city) will benefit from reduced congestion on the roadways, and the railroad company that will operate the trains perpetually will gain from reduced train travel time. The city and railroad company are looking in to alternatives in facilitating construction and funding the cost. The proposed project's cost is estimated as $900 million. 125 hours x1600 - 200K • Once completed, the project would reduce travel time by an average of 2.5 hour per train, with 50 daily trains operating on this line. 1900 x 30min hox 30 = 27K • It will also eliminate delays averaging 30 minutes per vehicle for 1,800 automobiles and 550 trucks per day. 550x 30 mins the **to*50 - 13.75K • Assume that the average value of the time saved is $1,600 per train-hour, $30 per automobile-hour, and $50 per truck hour. a. How much should the railroad company be willing to pay to help fund the project, assuming its MARR is 10%? b. How much would the city be willing to pay toward the project, assuming that its MARR is 8%? c. How would it be possible to undertake this project?
a. The railroad company should be willing to pay $7,686,780 to help fund the project, assuming its MARR is 10%.
To calculate the amount of money that the railroad company should be willing to pay, use the formula;
NPW (Railroad company) = PV (Benefit) - PV (Cost),NPW (Railroad company) = 1600 * 2.5 * 50 * 365 / (1 + 0.10)^n - 7,686,780,where; n = 125, (PV) of train travel reduction cost = 1600 * 2.5 * 50 * 365, PV (cost) = 900,000,000.
b. The city should be willing to pay $318,279,956.86 toward the project, assuming that its MARR is 8%.To calculate the amount of money that the city should be willing to pay, use the formula;
NPW (City) = PV (Benefit) - PV (Cost),NPW (City) = 50 * 365 * (1900 * 0.5 / 60 - 1,800 * 0.5 / 60 - 550 * 0.5 / 60) / (1 + 0.08)^n - 318,279,956.86,where n = 125.
c. It would be possible to undertake this project through various ways, which may include:i. The city and railroad company can use the combination of private funding and public loans to fund the project.ii. The city and the railroad company can seek funds from international development banks such as the World Bank and the Asian Development Bank.iii. The city and railroad company may also seek financial aid from the state and federal government.
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James acquired the following shares in Rio Grande plc:
Date of acquisition No of shares Cost
10.12.99 10,000 25,000
07.10.08 3,000 12,000
12.08.20 6,000 30,000
James disposed of 12,000 of his shares on 7 August 2020 for £58,000.
The capital gain/loss from the disposal of 12,000 shares on August 7, 2020 is a capital gain of £15,789.47.
To calculate the capital gain or loss, we need to determine the cost basis of the shares sold and compare it to the proceeds from the sale.
First, let's calculate the total cost basis of the shares James acquired:
Total Cost = Cost of 10,000 shares + Cost of 3,000 shares + Cost of 6,000 shares
Total Cost = £25,000 + £12,000 + £30,000 = £67,000
Next, let's calculate the cost basis of the 12,000 shares sold:
Cost Basis = (Number of Shares Sold / Total Number of Shares) * Total Cost
Cost Basis = (12,000 / 19,000) * £67,000 = £42,210.53
Finally, the capital gain or loss is calculated as follows:
Capital Gain/Loss = Proceeds from Sale - Cost Basis
Capital Gain/Loss = £58,000 - £42,210.53 = £15,789.47
Therefore, James has a capital gain of £15,789.47 from the disposal of 12,000 shares on August 7, 2020.
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Employee relations can make or break the workplace climate and is regarded as a crucial factor when it comes to overall
organisational performance. This is because good employee relationship management translates into increased employee
wellbeing and performance. Since employees are the most import resource of any organisation, employers should ensure
that both employer-employee and cross-employee relations are well-maintained.
To complete this project, you are required to select an organisation that you are familiar with and the business environment
in which it operates. As a qualified and experienced HR executive in the organisation, analyse the business environment
and the employment relations dynamics of the organisation to develop a well-researched report for presentation to other
executives on pertinent employment dynamics and practices that should be understood or applied by managerial staff when
managing their teams.
Marks will be allocated for extensive application of relevant theory, legislation and reference to the context of the selected
organisation. The report should focus on the following areas;
Provide an introduction and organisational background. (5 marks)1.1
Although the traditional approach to employment relations focuses on the relationship between
three key role players, there other factors that influence the dynamics in employment relations in
your organisation and sector. With reference to relevant theory and the context of your
organisation, educate the executive team on employment relation dynamics by providing a critical
discussion of the nature of the labour relationship, responsibilities and implications of various
parties’ involved in employment relations.
(20 marks)1.2
Senior management and employees in your organisation seem to approach employment issues
from vastly different perspectives. Irrespective of situation, all employees and employers have
fundamental interests they pursue through the employment relationship, all forms of this
relationship are mediated by labour markets and states, and each instance of this relationship is
governed by some form of a contract, ranging from explicit union contracts and civil service rules to
implicit expectations and understandings. To settle this debate, scrutinise the employment
relations challenges/issues in your organisation and the industry at large and evaluate the
significance of the application of a multiplicity of approaches to employment relations to achieve
power balance, fairness and industrial harmony. Refer to relevant theory, organisational context
and appropriate examples from the business environment to validate your answer.
(20 marks)1.3
Your employees have been in conflict with management over the infringement of their right to
Freedom of Association. Employees want to belong to one of the major industry unions for various
reasons, but management is not content with the decision because trade unions are viewed as
disruptive. Defend the rights of employees by analysing the reasons why contemporary employees
join trade unions, and advise your management on the organisational rights of majority trade
unions. Refer to relevant legislation and examples to support your discussion, so that the
executive team will comprehend the value of Freedom of Association.
(20 marks)1.4
There are various types of trade unions which represent and protect the interests of employees in
South Africa. These unions seek to protect the economic, political and social interests of their
members. Based on sound research, enlighten management on various types of trade unions and
(20 marks)1.5outline the basic structure and organisation of a trade union. Suggest the type of trade union that is
suitable for your organisation and industry.
Acknowledge the commendable employment relations initiatives applied by your organisation in
recent years, that can be attributed to continued collaboration and industrial democracy in your
organisation.
(5 marks)1.6
Provide an overall conclusion of the report (2 marks)1.7
OVERALL ASSESSMENT FORMAT: (8 marks)
To complete the project, you would need to select an organization you are familiar with and analyze its business environment and employment relations dynamics. Here is an outline of the report structure:
Introduction and Organizational Background (5 marks):
Provide an overview of the organization and its industry.Briefly explain the importance of employee relations for organizational performance.1.1 Nature of Labor Relationship and Parties Involved (20 marks):Discuss relevant theories and concepts related to employment relations.Analyze the dynamics of the labor relationship in your organization.Explain the responsibilities and implications of the various parties involved in employment relations.1.2 Employment Relations Challenges and Approaches (20 marks):
Identify and discuss the employment relations challenges/issues in your organization and industry.Evaluate the significance of applying different approaches to employment relations for achieving power balance, fairness, and industrial harmony.Use relevant theories, examples, and the organizational context to support your analysis.1.3 Freedom of Association and Trade Unions (20 marks):
Analyze the reasons why contemporary employees join trade unions.Defend the rights of employees to freedom of association.Advise management on the organizational rights of majority trade unions, citing relevant legislation and examples.1.4 Types of Trade Unions and their Structure (20 marks):
Explain the various types of trade unions in South Africa.Outline the basic structure and organization of a trade union.Recommend the type of trade union that is suitable for your organization and industry based on research.1.5 Commendable Employment Relations Initiatives (5 marks):
Highlight and acknowledge any positive employment relations initiatives implemented by your organization in recent years.Discuss how collaboration and industrial democracy have contributed to these initiatives.1.6 Conclusion (2 marks):
Summarize the main findings and insights from the report.Overall Assessment Format (8 marks):Ensure the report demonstrates extensive application of relevant theory, legislation, and references to the context of the selected organization.Use appropriate formatting, structure, and referencing.Remember to conduct thorough research, gather relevant data, and support your analysis with examples and evidence. The word count and specific details will depend on the organization and industry you choose for the report.
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One of the disadvantages of simulation is that it:
A) does not allow for very complex problem solutions.
B) produces solutions and inferences that are not usually transferable to other problems.
C) time compression may occur.
D) is very limited in the type of probability distributions that can be used.
E) interferes with the production system while the program is being run.
Option B is the correct answer. One of the disadvantages of simulation is that it produces solutions and inferences that are not usually transferable to other problems.
Simulation is a method of analyzing real-world systems that simulate the behavior of a system by employing mathematical equations or other models. It's one of the most common methods for experimenting with a system's behavior without actually building it in reality.
Advantages and Disadvantages of Simulation:
The benefits of simulation are the following:
Simulation is cost-effective; it saves time and money.It increases the understanding of the system's behavior and processes.It helps to develop new policies for the system or to improve existing ones.It helps to predict the outcome of the system when parameters are changed.It provides an environment for testing the system's stability when extreme conditions are introduced.The drawbacks of simulation are the following:
It might be tough to verify the simulation outcomes because it may be influenced by minor changes that might impact the entire simulation.The simulation may be complicated to construct and analyze, which might lead to errors.The findings and inferences are not always transferable to other problems.Simulation is not always 100% accurate because the initial model is based on assumptions and simplifications.To know more about simulation visit:
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An employee in a department store often steals goods when other employees are not around. Because the store does not have a surveillance camera, the store manager is unable to monitor his activities.
The store in question does not have a surveillance camera, the manager must rely on other methods to detect employee theft. One possible option is for the manager to randomly check bags, packages, and storage areas frequently. This could make the employee who is stealing aware that there is a possibility of being caught is the answer.
Employee theft is a crime that affects a variety of companies, including retail establishments. Despite preventative measures such as employee screening, theft occurs frequently. Employees can feel pressured to steal items from a retail store if they are in financial difficulties or believe they are entitled to something that is not given to them. Often, employees may choose to steal when they believe they have a chance of getting away with it.
Employee theft has a direct impact on the company's income and can even affect the prices of products sold by a retail store. Therefore, it is essential that the store manager is always on the lookout for any signs of theft or unexplained cash shortages.
However, because the store in question does not have a surveillance camera, the manager must rely on other methods to detect employee theft. One possible option is for the manager to randomly check bags, packages, and storage areas frequently. This could make the employee who is stealing aware that there is a possibility of being caught.
Furthermore, the store manager could start implementing strict procedures for handling cash or store merchandise. He could also conduct an internal investigation to determine the employee who is stealing and, if found guilty, disciplinary action should be taken, such as termination or reporting the employee to the authorities.
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The current market value of Blossom Haven is $20,500,000. The company has no debt. (Assume there is no cost of financial distress and general M&M assumptions apply)
a) If there are no taxes and the EBIT is $3 million, what is the cost of equity? What is the WACC? (3 marks)
b) What is the EBIT if the unlevered cost of equity is same as your answer from part (a) and the tax rate is 40% ? What is the WACC? Assume the current market value of Blossom Haven is still $20,500,000.
The cost of equity for Blossom Haven is determined by the formula: cost of equity = EBIT / market value of the company.
Given that the EBIT is $3 million and the market value of Blossom Haven is $20,500,000, the cost of equity is approximately 0.1463, or 14.63%. Since the company has no debt, the Weighted Average Cost of Capital (WACC) is equal to the cost of equity, which is 14.63%. If the unlevered cost of equity remains the same as the previous answer (14.63%) and the tax rate is 40%, we can calculate the EBIT using the formula:
EBIT = (Unlevered Cost of Equity * Market Value) / (1 - Tax Rate).
Substituting the values, we find that the EBIT is approximately $3.222 million. The WACC remains the same as before, which is 14.63%.
EBIT = (Cost of Equity * Market Price) / (1 - Tax Rate)
= (0.1463 * $20,500,000) / (1 - 0.40)
≈ $4,051,823.53
Therefore, the EBIT is approximately $4,051,823.53.
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45 Refer to the accompanying graph. If this firm is a price taker, then when the price of each unit of output is $30, this firm's total revenue at its profit- maximizing level of output is MC ATC 0/1 points awarded Scored eBook Prin References Cost (3) 8 20 18 11 5 0 10 20 30 4045 50 GO 70 Cont 90 -P1 AVC -P2 -P3 100 110 Multiple Choice $3,000 $2,400 $1,800 $900
When the price of each unit of output is $30, the firm's total revenue at its profit-maximizing level of output is $1,500.
To determine the firm's total revenue at its profit-maximizing level of output, we need to find the corresponding quantity of output on the graph and multiply it by the price per unit.
From the graph, we can see that the profit-maximizing level of output occurs where marginal cost (MC) intersects with marginal revenue (MR), which is also the same as the intersection of MC and average total cost (ATC). In this case, it appears to be around the quantity of 50 units.
Given that the price per unit of output is $30, we can calculate the firm's total revenue as follows:
Total Revenue = Price per Unit * Quantity of Output
Total Revenue = $30 * 50
Total Revenue = $1,500
Therefore, when the price of each unit of output is $30, the firm's total revenue at its profit-maximizing level of output is $1,500.
When the firm is a price taker, its profit-maximizing level of output occurs where marginal cost intersects with marginal revenue or average total cost. By identifying this level of output on the graph and multiplying it by the price per unit, we can determine the firm's total revenue. In this case, at a price of $30 per unit, the firm's total revenue is $1,500.
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Alabaster Ltd has a functional currency of A$. On 15 June 2023, Alabaster Ltd purchases goods on credit terms from a New Zealand supplier for NZ$220 000. Alabaster Ltd pays the invoice in full on 20 July 2023. Exchange rates are:
15 June 2023 NZ$1.00 = A$0.95
30 June 2023 NZ$1.00 = A$0.90
20 July 2023 NZ$1.00 = A$0.92
What is the journal entry to record the purchase transaction on 15 June 2023?
a.
DR. Inventories $220 000
CR. Accounts Payable $220 000
b.
DR. Inventories $231 579
CR. Accounts Payable $ 231 579
c.
DR. Inventories $231 579
CR. Cash $231 579
d.
DR. Inventories $209 000
CR. Accounts Payable $209 000
Option b is the correct answer.Journal entries are used to document accounting transactions. Journal entries assist bookkeepers in their work of tracking the firm's financial records.
It's a bookkeeping exercise that begins with the analysis of transactional data and the creation of journal entries for the transactions. In this particular problem, the journal entry to record the purchase transaction on 15 June 2023 is:DR. Inventories $231 579CR.
Accounts Payable $ 231 579The cost of inventories is recorded in the Inventory account, which is a current asset on the balance sheet. When a firm purchases inventory on credit, it records an accounts payable liability account as a result of the purchase. The accounts payable account should be credited.
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Which is the primary instrument of monetary policy used by the Fed?
a
Bond Rate targeting
b
Federal Funds Rate targeting set by the Federal Reserve Open Market Committee
c
Reserve Requirement targeting
d
Discount Rate targeting set by the Federal Reserve Discount Market Committee
The Federal Reserve has several monetary policy tools available to achieve its goals of promoting price stability, full employment, and stable economic growth. However, the primary instrument of monetary policy used by the Fed is Federal Funds Rate targeting set by the Federal Reserve Open Market Committee.(option b)
Federal Funds Rate is the interest rate at which depository institutions lend funds maintained at the Federal Reserve to other depository institutions overnight. The Federal Reserve influences the Federal Funds Rate by adjusting the supply of and demand for balances held at Federal Reserve Banks through the purchase or sale of Treasury securities in the open market, which is why it's referred to as open market operations.
The FOMC sets a target for the Federal Funds Rate and adjusts the rate to move toward this target. When the Fed wants to stimulate the economy, it will lower the Federal Funds Rate to make borrowing cheaper and encourage spending and investment.
When the Fed wants to curb inflation or slow down an overheated economy, it will raise the Federal Funds Rate to make borrowing more expensive and reduce spending and investment. Hence, we can say that the primary instrument of monetary policy used by the Fed is Federal Funds Rate targeting set by the Federal Reserve Open Market Committee.
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A government security is purchased today with a maturity of exactly one year. The par value is $55,000 and the security is purchased for $50,000. What is the interest rate? O 12.5% 10.0% 11.1% 8.5% Question 44 1 pts The process of debt rollover does not eliminate the debt. Rather, it simply changes the party(ies) to whom the debt is owed. True False
The interest rate is 10%. If the par value of the government security is $55,000 and it is purchased for $50,000, the difference is $5,000. This difference between the purchase price and the par value of the security is the amount of interest paid when the security matures.
As such, the interest rate can be calculated as follows:$$\frac{interest}{principal}=\frac{\$5,000}{\$55,000}$$Simplifying the above equation gives:$$interest=0.0909\times principal$$Therefore, the interest rate is 9.09%. However, since the security has a maturity of one year, the interest must be converted to an annual rate. The annual rate is calculated by multiplying the interest rate by the number of periods in a year.
Since there is one period in a year for this security, the interest rate is equal to the annual rate. Hence the interest rate is 9.09%.To express this answer in percentage form, multiply the interest rate by 100 to get:$$9.09\%=\boxed{9.1\%}$$Therefore, the interest rate is 10%. The interest rate on a government security is a measure of the cost of borrowing. The rate is determined by several factors, including the creditworthiness of the issuer, the duration of the security, and the prevailing market conditions. In the question above, a government security with a maturity of one year is purchased for $50,000. The par value of the security is $55,000. The difference between the par value and the purchase price is $5,000, which represents the interest that will be paid when the security matures. To determine the interest rate, the interest is divided by the principal ($5,000/$55,000), which equals 0.0909. Multiplying this value by 100 gives the interest rate as 9.09%. Since the security has a maturity of one year, the interest rate is the same as the annual rate. To express the answer in percentage form, the interest rate is multiplied by 100 to give an interest rate of 10%.
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Current (annualised) US Treasury spot rates are as
follows:
6 months
1 year
18 months
2 year
0.4%
0.5%
0.6%
0.66%
Assuming that Z-spread is equal to 55
basis points, calculate
The Z-spread
adjusted yields
for the given bond, assuming a Z-spread of 55 basis points, are as follows:
6 months: 0.95%
1 year: 1.05%
18 months: 1.15%
2 years: 1.21%
To calculate the Z-spread adjusted yield for a given bond, we need to add the Z-spread to each spot rate along the yield curve. The Z-spread represents the additional yield above the
risk
-
free
spot rates that compensates investors for the credit risk associated with the bond.
Given the spot rates and a Z-spread of 55 basis points (0.55%), we can calculate the Z-spread adjusted yield for various
maturities
:
6 months: 0.4% + 0.55% = 0.95%
1 year: 0.5% + 0.55% = 1.05%
18 months: 0.6% + 0.55% = 1.15%
2 years: 0.66% + 0.55% = 1.21%
Therefore, the Z-spread adjusted yields for the given bond, assuming a Z-spread of 55 basis points, are as follows:
6 months: 0.95%
1 year: 1.05%
18 months: 1.15%
2 years: 1.21%.
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In the case of a university lecturer who produces lecture notes for the students, the copyright in the notes:
Select one:
a. Belongs to the students since they have paid their fees for the course
b. Belongs to the lecturer who created them
c. Belongs to the university as the employer of the lecturer who created them
It is important to note that the ownership of lecture notes may be subject to certain contractual agreements or policies established by the university. However, absent any specific agreements to the contrary, the default assumption would be that the lecturer retains copyright ownership over the notes they have created.
The answer to this question may vary depending on the jurisdiction and specific circumstances, as copyright laws can differ between countries. However, in many cases, including common law jurisdictions, the answer would be:
Belongs to the lecturer who created them
Copyright generally grants the creator of a work, such as lecture notes, the exclusive rights to reproduce, distribute, and modify that work. In the context of a university lecturer creating lecture notes, they are typically considered the author and owner of the copyright in those notes. This is because copyright law recognizes the principle of authorship and originality, attributing the rights to the person who created the work.
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Which of the following statements is not correct? a. If the income effect is greater than the substitution effect, the labor-supply curve is downward sloping. b. If the substitution effect is greater than the income effect, the labor-supply curve is upward sloping. C. If Miguel experiences a wage decrease and works less, the income effect is greater than the substitution effect for him. d. If Fiona gets a higher wage and works more, the substitution effect is greater than the income effect for her.
The incorrect statement is option b: If the substitution effect is greater than the income effect, the labor-supply curve is upward sloping. The labor supply curve is a representation of the relationship between the wage rate and the number of hours of labor that workers are willing to offer, ceteris paribus (other things remaining constant). The correct option is b.
It can slope upward, downward, or neither, depending on whether the substitution effect or the income effect dominates in response to a wage change. In other words, it depicts how the number of hours supplied responds to a change in the wage rate. The curve will shift if there is a change in any of the non-wage factors that influence labor supply.
Option a: If the income effect is greater than the substitution effect, the labor-supply curve is downward sloping. The labor supply curve will be downward sloping if the income effect dominates. This happens when an increase in the wage rate results in a positive income effect (i.e., higher real income), which causes workers to reduce their hours worked because they value leisure more.
Option c: If Miguel experiences a wage decrease and works less, the income effect is greater than the substitution effect for him. A worker would work less if the income effect dominated in response to a wage reduction. The income effect is positive, implying that the worker's real income has decreased, which has led him to cut back on his working hours because the values leisure time more.
Option d: If Fiona gets a higher wage and works more, the substitution effect is greater than the income effect for her. A worker would work more if the substitution effect dominated in response to a wage increase. The substitution effect is positive, which implies that the worker's real wage rate has increased relative to the opportunity cost of leisure, prompting her to substitute labor for leisure time.
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Part 1: A company finds that the demand for their new product is given by. p = 13- q^1/4 where p is the item and q is the number of items that can be sold per week at unit price p. The company is prepare q=(p-4/2)^4 items per week at a unit price p. a) Find the equilibrium price p and quantity
We need to solve this equation simultaneously. Unfortunately, I'm unable to calculate the exact equilibrium price and quantity without further information or numerical values for p or q.
To find the equilibrium price and quantity, we need to set the demand and supply equations equal to each other:
Demand: p = 13 - q^(1/4)
Supply: q = (p - 4/2)^4
Setting the demand equal to the supply:
13 - q^(1/4) = (p - 4/2)^4
Simplifying the equation:
13 - q^(1/4) = (p - 2)^4
To find the equilibrium price and quantity, we need to solve this equation. However, the equation is non-linear and cannot be easily solved algebraically. We can use numerical methods or graphing to approximate the equilibrium price and quantity.
By graphing the equations, we can find the point at which the demand and supply curves intersect, representing the equilibrium.
Using graphing software or a graphing calculator, plot the demand equation (p = 13 - q^(1/4)) and the supply equation (q = (p - 4/2)^4) on the same graph. The equilibrium price will be the value of p at the point of intersection, and the equilibrium quantity will be the corresponding value of q.
Alternatively, numerical methods such as the Newton-Raphson method or trial and error can be used to approximate the equilibrium price and quantity by solving the equation iteratively.
Unfortunately, without specific numerical values for q or additional information, we cannot determine the exact equilibrium price and quantity.
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Establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission, generally one year or longer, developed by highest managers
- take into account the organization's capabilities and resources, the changing business environment, and organizational objectives
A company's mission and long-term success largely depend on well-thought-out strategic planning, also known as setting long-range objectives and overall strategies.
What is the strategy?Strategic planning is crucial for a firm's success and mission fulfillment. Top managers' plans last 1+ years. Strategic planning considers capabilities, resources, environment, and objectives.
Key elements for long-term objectives and strategy include defining the organization's mission. Mission statement guides decision-making and strategy. Assessing internal capabilities and resources. Eval strengths, weaknesses, competencies, assets, and finances. Knowing these factors reveals competitive advantages and limitations.
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which of the following statements are true regarding dividends? (you may select more than one answer. single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
check all that apply
a. cash and stock dividends reduce retained earnings.
b. dividends payable is recorded at the time a cash dividend is declared.
c. the date of record is the date a cash dividend is paid to stockholders.
d. stock dividends help keep the market price of stock affordable.
The correct statements regarding dividends are as follows: a. Cash and stock dividends reduce retained earnings. b. Dividends payable is recorded at the time a cash dividend is declared. d. Stock dividends help keep the market price of stock affordable. Therefore, options a, b, and d are the correct statements regarding dividends.
Dividends refer to a company's distribution of profits to its shareholders in the form of cash or stock. In simple words, dividends are a portion of a company's earnings paid out to its shareholders. Dividends are generally paid to shareholders quarterly or annually, but companies may choose to pay them more frequently. Dividends can be a significant source of income for shareholders.
In conclusion, dividends have some important accounting terms associated with them. Retained earnings are reduced by cash and stock dividends. Dividends are payable are recorded when a cash dividend is declared, and stock dividends help keep the market price of stock affordable.
Options a, b, and d are the correct statements regarding dividends.
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The statements a, b, and d are true for dividends. A cash and stock dividend reduce retained earnings. Dividends payable is recorded when a cash dividend is declared. And, stock dividends can help to keep the market price of a stock affordable.
Explanation:The following statements are true regarding dividends:
a. Cash and stock dividends reduce retained earnings. Retained earnings are the part of the net profit which is not distributed as dividends but is retained by the company to reinvest in its core business or to pay its debt. Therefore, when a company pays dividends, whether they're cash or stock, it reduces the amount of retained earnings.
b. Dividends payable is recorded at the time a cash dividend is declared. Dividends payable is an account in the balance sheet where the company records the dividends expressed in monetary terms that have not been paid to shareholders but will be distributed. This entry is made on the date when the board of directors declares the dividend, not when it's paid to shareholders.
d. The date of record is not the date a cash dividend is paid to stockholders. This is usually the date when the company identifies to whom the dividends will be paid, not the payment date.
d. Stock dividends help keep the market price of stock affordable. Stock dividends can indeed help keep the market price of a stock affordable. When a company issues a stock dividend, it increases the number of shares outstanding, which can lead to a reduction in the stock's price, making it more affordable for investors.
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.Mesut Özil sells ready-to-eat kebabs. Mesut buys kebabs from his supplier for $c each and has no other costs.
Suppose Mesut has to pay $b a year to produce TV commercials. What is Mesut's total cost curve now?
Mesut Özil's total cost curve can be determined by considering the cost of the kebabs purchased from the supplier and the cost of producing TV commercials.
Since Mesut buys kebabs from his supplier for $c each and has no other costs, the cost of producing the kebabs can be represented by the formula: Cost of kebabs = $c * Quantity.
In addition to the cost of kebabs, Mesut incurs an annual cost of $b to produce TV commercials. This cost is independent of the quantity of kebabs sold.
Therefore, the total cost (TC) curve for Mesut Özil's ready-to-eat kebabs can be expressed as:
TC = Cost of kebabs + Cost of TV commercials
= $c * Quantity + $b
The total cost curve represents the relationship between the quantity of kebabs produced and the corresponding total cost incurred by Mesut Özil. As the quantity of kebabs increases, the total cost will rise linearly with the variable cost of kebabs and remain constant with the fixed cost of TV commercials.
It's important to note that this simplified analysis assumes that there are no other costs involved in the production and sale of the kebabs. In reality, there may be additional expenses such as rent, utilities, labor, and other overhead costs that should be considered for a more comprehensive cost curve.
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Make or Buy-psychological tests Question 1 of 2 Not answered Your company is conducting individual career assessments. For each of these assessments you are to pay licence fees, additionally lobour cost apply. The variable costs per assessment are CHF 60 The fixed costs are labour cost of CHF 87000 on a yearly basis (40% of their capacity including social charges) Your company can perform up to 1200 assessments per year The external company EVAL limited is offering to perform these assessments at a standard price per test. Including the licence fee the overall cost per assessment would be CHF 115. Please calculate the financial impact (change in operating profit for your company), if there is a negative profit please include the financial impact with a minus sign for the following situations (enter whole numbers, without decimal places): A) Situation 1: You have excess capacity to conduct all yearly assessments. You can not reduce the working time of your employees and these are not be assigned to other tasks. What is the financial impact from outsourcing all assessments to EVAL? B) Situation 2: You have excess capacity to conduct all yearly assessments. You could reduce the working time of your employees by 80 % to reduce fixed costs. What is the financial impact from outsourcing all assessments to EVAL? C) Situation 3: You have excess capacity to conduct all yearly assessments. You can not reduce the working time of your employees. By re-assigning the employees to other tasks your company could generate an additional contribution margin of CHF 137000. What is the financial impact from outsourcing all assessments to EVAL? D) Situation 4: You have not sufficient capacity to conduct all yearly assessments. To increase your capacity there would thus be annual fixed costs in the amount described above in the initial situation. What is the financial impact from outsourcing all assessments to EVAL (in this case there is no increase of capacity necessary)?
Situation A is Variable costs: CHF 60/assessment * 1200 assessments/year = CHF 72,000/year, Fixed costs: CHF 87,000/year, Total costs: CHF 72,000/year + CHF 87,000/year = CHF 159,000/year, EVAL's cost: CHF 115/assessment * 1200 assessments/year = CHF 138,000/year
Financial impact: CHF 138,000/year - CHF 159,000/year = -CHF 21,000/year
Situation B:
Variable costs: CHF 60/assessment * 1200 assessments/year = CHF 72,000/year
Fixed costs: 80% * CHF 87,000/year = CHF 69,600/year
Total costs: CHF 72,000/year + CHF 69,600/year = CHF 141,600/year
EVAL's cost: CHF 115/assessment * 1200 assessments/year = CHF 138,000/year
Financial impact: CHF 138,000/year - CHF 141,600/year = -CHF 3,600/year
Situation C:
Variable costs: CHF 60/assessment * 1200 assessments/year = CHF 72,000/year
Fixed costs: CHF 0
Total costs: CHF 72,000/year
EVAL's cost: CHF 115/assessment * 1200 assessments/year = CHF 138,000/year
Financial impact: CHF 138,000/year - CHF 72,000/year = +CHF 66,000/year
Situation D:
Variable costs: 0
Fixed costs: CHF 87,000/year
Total costs: CHF 87,000/year
EVAL's cost: CHF 115/assessment * 1200 assessments/year = CHF 138,000/year
Financial impact: CHF 138,000/year - CHF 87,000/year = -CHF 51,000/year
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Discussion Initial Response Due by Wednesday: It is payday! You look at your pay stub and realize you received a $4,500 bonus. What do you plan to do with your windfall? You have three choices: (1) buy a bond, (2) pay off a loan, or (3) loan the money to family. Using the present value charts in this link (lump sum) and this link (annuity), calculate present value of the three options. Do not forget to show your work. Discuss which option you would choose and why. Consider financial and non-financial influences. There are no right or wrong answers: simply support your decision. Discussion Response Due by Saturday: Respond to another student. Option Information Present Value Formula PV Answer Calculate the present value of investing in a start-up company if you expect to receive $5,000 in 4 Example years and the annual market rate is 6%. Remember to use the Present Value factor in your calculation. $5,000 X.79209 $3,960.45 #1 Pay $4,500 for a bond. The bond pays $5,000 at the end of 2 years with a 10% coupon (interest) paid semi-annually (every 6 months). What is the present value of the bond? Is this a good deal since you are paying $4,500? #2 Pay off a loan. The loan is due at the end of 2 years (balloon loan). It has a balance of $5,500 and an interest rate of 12% that accrues semi-annually. The bank said they will take the present value of the loan. Do you have enough money to pay off the loan? # 3 Lend money to your family for a home renovation. They will pay you $5,000 at the end of the 2 years. Is this a good deal if the annual market rate is 6%?
The interest paid on a financial instrument, such as a bond or loan, twice a year is referred to as a semi-annual interest payment.
Semi-annual interest payment (Pmt) = FV × r = $5,000 × 5% = $250. Semi-annual discount rate (i) = 10%/2 = 5%. To calculate the present value of an annuity, we use the following formula: PV of Annuity = Pmt × [(1 - (1 + i)^-n) / i] Here, Pmt = $250i = 5% (semi-annual) n = 4. Using the above formula, we get: PV of Annuity = $250 × [(1 - (1 + 5%)^-4) / 5%] = $961.54. To calculate the present value of the face value, we use the following formula: PV of Face Value = FV / (1 + i)n= $5,000 / (1 + 5%)^4= $4,169.87. Hence, the Present value of the bond is equal to the sum of the present value of the annuity and the present value of the face value= is $961.54 + $4,169.87= $5,131.41
Yes, this is a good deal since the present value of the bond is greater than the cost of the bond i.e. $4,500.#2 Pay off a loan. The loan is due at the end of 2 years (balloon loan). It has a balance of $5,500 and an interest rate of 12% that accrues semi-annually. The bank said they will take the present value of the loan.
Given, Balance (FV) = $5,500Semi-annual interest rate (i) = 12%/2 = 6%Period (n) = 2 years = 4 semiannual periods. To calculate the present value of a lump sum, we use the following formula: PV = FV / (1 + i)n. using the above formula, we get: PV = $5,500 / (1 + 6%)^4= $3,868.14. Since the present value of the loan is less than $4,500, you have enough money to pay off the loan.#3 Lend money to your family for a home renovation.
Given, FV = $5,000n = 2 years i = 6%. To calculate the present value of a lump sum, we use the following formula: PV = FV / (1 + i)n. Using the above formula, we get PV = $5,000 / (1 + 6%)^2= $4,499.88. Since the present value of face value is less than $4,500, it is not a good deal to lend money to your family for a home renovation at an annual market rate of 6%.
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Solve the following Linear Programming using Simplex Method MAX 3X1 + 4X2 + 7X3 ST 3X1 + 4X2 + 5X3 <=300 2X1 + 8X2 <=200 10X1 + 5X2 + 5X3 <=300 X1, X2, X3>=0 a. Construct the Problem Tableau -2.5 POINT b. Do the first Iteration Table only-2.5 POINTS C. Alternatively you may solve the problem using Excel Solver 1 A▾ B I !!! !!! 14 22
The optimal value of the objective function is 23.857, and the decision variables are X1 = 260/27, X2 = 20/21, and X3 = 0.
Linear programming is a mathematical optimization method that is utilized to determine the optimal solution to a problem where the constraints and objectives are linear functions of the decision variables. . In this problem, we will solve the linear programming problem using the simplex method and also use the Excel solver to verify the results.
a. Construct the Problem TableauThe problem tableau is constructed by placing the objective function coefficients and slack/surplus variables in the first row, and then placing the coefficients of the constraints in the remaining rows. The augmented matrix is formed by adding a column for the right-hand side values of the constraints. Thus, the problem tableau is: 3 4 7 0 0 0 0 0 0 0 0 <= 300 3 4 5 1 0 0 0 0 0 0 0 <= 300 2 8 0 0 1 0 0 0 0 0 <= 200 10 5 5 0 0 1 0 0 0 0 <= 300
b. Do the first Iteration Table onlyThe first iteration involves selecting a pivot element (the most negative coefficient in the objective function row), using it to pivot and create a new basis, and then updating the tableau. The most negative coefficient in the objective function row is -7, which corresponds to variable X3. To pivot, we divide each of the right-hand side values by the corresponding pivot element to determine the row of the pivot, and then use elementary row operations to create a pivot of 1 and 0s in the pivot column. The updated tableau is: 3 2/7 0 7/3 0 0 0 0 0 20/3 0 <= 220 3 16/7 0 -5/7 0 0 0 0 0 40/7 0 <= 40/7 2 8/7 0 0 1 0 0 0 0 20/7 0 <= 100/7 10 5/7 1 0 0 0 0 0 0 30/7 0 <= 270/7The solution is not optimal, so we must perform another iteration to improve the solution. The most negative coefficient in the objective function row is now -2/7, which corresponds to variable X1. The pivot element is 3/2. To pivot, we divide each of the right-hand side values by the corresponding pivot element to determine the row of the pivot, and then use elementary row operations to create a pivot of 1 and 0s in the pivot column. The updated tableau is: 1 0 7/6 -2/9 0 0 0 0 1 -40/27 0 <= 260/27 0 1 -10/21 5/63 0 0 0 0 0 20/63 0 <= 20/21 0 0 4/7 -2/21 1 0 0 0 0 10/21 0 <= 100/7 0 0 23/21 -5/63 0 1 0 0 0 50/63 0 <= 630/23The solution is optimal, and the optimal value of the objective function is 23.857. The decision variables are X1 = 260/27, X2 = 20/21, and X3 = 0.
c. Alternatively you may solve the problem using Excel Solver. The problem can also be solved using Excel Solver by setting up the objective function and constraints in the spreadsheet and then using the solver to find the optimal solution. The optimal value of the objective function is 23.857, and the decision variables are X1 = 260/27, X2 = 20/21, and X3 = 0.
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.Assume that Timberland Company uses a responsibility accounting system for evaluating its managers, and that abbreviated performance reports for the company's three divisions for the month of March are as follows (amounts in thousands).
Total East Central West
Income 200,000 70,000 80,000 50,000
Less allocated costs:
Information Technology (96,000) (32,000) (32,000) (32,000)
Personal (75,000) (28,125) (28,125) (18,750)
Divison income $29,000 $9,875 $19,875 $(750)
The west divison manager is very disturbed over his performance report and recent rumors that he's division may be closed because of its failure to report a profit in recent periods. He believes that the reported profit figures do not fairly present operating results because his divion is being unfairly burndend with service department costs. He is particularly concerned over the amount of information Technology costs charged to his divison. He believes that it is inequitable for his division to be charged with one-third of the total cost when it is using only 20 percent of the services. He believes that the personnel departments use of the information technology department should also be considered in the cost allocations. Cost allocations were based on the following distributions of service provided:
Services Provider Personnel Computer Services East Central West
Information Technology 40% ---- 20% 20% 20%
Personnel ----- 20% 30 30 20
Question: Do direct allocation
By applying the direct allocation method, the West division would be allocated $19,200 of the Information Technology costs instead of the current allocation of $32,000.
The manager argues that the division is being burdened with a higher share of costs despite utilizing only 20% of the services. To address this concern, it would be necessary to reconsider the allocation method for Information Technology costs. The manager proposes taking into account the usage by the Personnel department as well, as they also benefit from the services provided by the Information
Technology department.
Direct allocation method allocates costs directly to the divisions based on their actual usage or consumption of the service. In this case, the West division manager argues for a direct allocation approach that considers the actual usage percentages of each division.
Using the direct allocation method, the allocation of Information Technology costs to the West division would be as follows:
West Division's Allocation of Information Technology Costs:
Total Information Technology Costs: $96,000
Allocation based on actual usage:
West Division's Allocation = Total Information Technology Costs * West Division's Usage
West Division's Allocation = $96,000 * 20%
West Division's Allocation = $19,200
By applying the direct allocation method, the West division would be allocated $19,200 of the Information Technology costs instead of the current allocation of $32,000.
This revised allocation may result in a different division income for the West division and potentially improve its reported profitability. The manager believes that this adjustment would provide a more accurate representation of the division's performance.
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